New bubble is on way, bank probe warns

The property market is heading for another bubble, the Banking Inquiry has been warned.

The current cost of office accommodation in Dublin is reaching an "unsustainable" level, John Moran, director of Jones Lang LaSalle estate agents, said.

He agreed with inquiry chairman Ciaran Lynch that this was "a warning light flashing" and he was quite concerned "we could be getting" to a bubble stage.

His view was echoed by Marie Hunt, executive director and heard of research at CBRE Ireland who warned: "Of course we're going to have another property bubble because we're in a cyclical market."

Replying to questions from Deputy Michael McGrath, Mr Moran described as a "major concern" the lack of affordable office accommodation in the city and "probably even more important, the lack of affordable rental accommodation".

The current commercial rent prices at €50-€55 per square foot were similar to those in 2005 when his company began to warn clients about the danger of the market overheating.

Mr Moran, whose company was joint agent for the sale of the Irish Glass Bottle site in Dublin at the height of the boom for €412m, also rejected criticism for the high sale price.

Apologise

Asked by Sen Michael Darcy if this sale had contributed to the boom-bust cycle, Mr Moran said: "I do not apologise for that for one moment." His job was to maximise the sale.

At the height of the boom, Mr Moran said, property buyers were also paying up to 50pc above prices suggested.

The amounts were 20pc-50pc above those advised by his company and "frankly we were quite unsure" how the buyers came to agree to these prices, he told the Banking Inquiry.